There is a rather good summary in Bloomberg on why Singapore’s Central Bank do not hold a Key Interest Rate. I think its a good read, a good refresh to go through some thought blue chip investment singapore when it comes to how externalities affect your Singapore investments, your investments in other parts of the world.

I do get a fair bit of question as to why do the interest rate in the rise affects Singapore’s interest rate. By no means am I good at this so this article is a good read for me to go through some of these scenarios. The overall idea premise is that there are likely to be more cross currents in the macro markets, and reading it is going to be very difficult. If your investments require you to have an extremely good read on the macro markets, this is something you have to think about. For the REIT investor or investor with interest sensitive nature, understanding roughly the dynamics help a fair bit. The long story short is that Singapore is a small country, with an open economy that we earn more by exporting goods and services rather than our own consumption. Pulling the currency lever changes the attractiveness of exports much more than interest rates.

If currency is unstable, it affects the consumption as it might be inflationary. If our currency weakens, it makes Singapore less desirable as a place to based your regional headquarters. If your currency is too strong, your exports become too expensive, but you control your internal inflation if your country consumes a lot of imported goods and services. How MAS manages it is to allow the currency to fluctuate within a controlled policy band.